Government has in the 2021 budget statement announced the suspension of vehicle income tax for commercial public transports, popularly called trotros and taxis, to reduce the cost of transportation under its tax relief programme.
Small businesses will also enjoy the suspension of income tax stamp payments, the Minister for Parliamentary Affairs and Majority Leader Osei Kyei-Mensah-Bonsu disclosed during the presentation of the budget in Parliament on Friday (12 March).
Kyei-Mensah-Bonsu also announced tax relieves of 30% on corporate income tax to benefit hotels, restaurants, education, arts and entertainment as well as travel and tours sectors.
“A waiver of penalty and interest on accumulated tax arrears up to December 2020 to reduce cash flow challenges will also target companies and individuals,” he noted.
Meanwhile, he said government is introducing a COVID-19 Health Levy of 1% on VAT, Flat Rate Scheme and a 1% on National Health Insurance Levy (NHIL) as part of revenue measures to help the economy recover, according to the 2021 budget statement presented in Parliament.
According to him, the levies will be used for the procurement of vaccines and establishment of 14 medical waste treatment facilities.
The caretaker finance minister said the levy “will also assist in the construction of 33 major health projects, the recruitment of more health professionals and Agenda 111.”
Agenda 111 would see the construction of 100-bed capacity district hospitals in 101 districts with no hospitals. It is the latest ever investment in healthcare infrastructure in Ghana’s history and a massive vision by the Akufo-Addo-led administration for Ghana’s healthcare sector.
Ghana’s debt stock
Kyei-Mensa-Bonsu said COVID-19 pandemic pushed Ghana’s deficit and debts to worrying levels, according to statistics presented in the 2021 budget statement.
He said the current debt stock is GHS 291.6 billion with 76.1% GDP as compared to 2016 where the debt stock was GHS122 billion and a GDP of 56.9%.
Explaining what accounted for the debt stock, the majority leader said fiscal impact of COVID-19 was GHS19.7 billion, cost of financial sector clean-up was GHS 21 billion while GHS 12 billion was the cost of Excess Capacity charges paid to IPPs.
“Without aforementioned factors, debt stock would be targeting GHS 238.9billion with 58.7 of GDP. The revision of growth rate is from an average of 7% between 2017-2019 to 0.9% in 2020,” he said.
Between 2004 and 2008, Ghana’s debt stock increased by 30% under the Kufuor-led New Patriotic Party administration. Between 2008-2012 the debt stock jumped to 269% under the Mills NDC administration and 243% between 2012 and 2016 under the Mahama NDC government. Between 2016 to 2020, the country’s debt stock has risen to 137% under the Akufo-Addo administration.